Proposed amendments to the Port City Commission Act will pose a systematic risk of a destabilized economy, MP Faiszer Mustapha warned yesterday (07).

In a speech to parliament, he congratulated Harsha Amarasekara, PC, on his appointment as new chairman of the Colombo Port City, while taking a jab at the government over the Board of Investment not having a director general for four years now.

Referring to the Port City Commission Act, he said Banking Act regulations governing offshore banking will not be applicable in the future.

The suggested amendments allow banking licenses issued previously by the Central Bank under the said act to be issued by the Port City Commission.

Mustapha questioned if the commission had any expert knowledge to issue such licences, and said it could create a shadow banking system.

Furthermore, foreign banks operating in the port city will get the opportunity to obtain dollar loans from local banks to make a considerable impact on foreign reserves as well as the local banking system, he said.

The Central Bank has been maintaining a capital adequacy rate of 10 percent in excess of the international ‘Basal’ standards in order to safeguard local banks, but the proposed amendments to allow for international standards only will lead to an atmosphere of uncertainty, said the MP.

Tax pressure on the Port City’s Sri Lankan workers as a result of a high-income tax of 36 pc will increase brain drain among talented youth and professionals.

He compared Sri Lanka lower in investment competition to a country such as Dubai, with energy and labour costs remaining at high levels.

Mustapha stressed the importance of encouraging local investors, while noting that they turn to countries like Dubai due to approval having to be obtained from as many as 21 institutions when starting a project in immovable property field.

Another impediment to investments is the absence of a specific timeframe to either accept or reject an application submitted to the Port City Commission, he said.

The MP urged the government for steps to make Sri Lanka an investment-friendly nation in the region without having to confine itself to conditions of the IMF.

(Source- The Leader)